How does Chain Abstraction work?

If you’re looking to learn about the basics about Chain Abstraction, then read this article instead.

Technically speaking, chain abstraction means abstracting away the differences between blockchain networks to provide a seamless experience. The goal is to:

1. Simplify User Interaction: Make it easy for users to interact with apps without worrying about which chain they’re on.

2. Enable Interoperability: Allow assets, data, and actions to move freely between chains.

3. Reduce Complexity for Developers: Provide unified tools and APIs to build cross-chain applications.

To achieve chain abstraction, several tools and mechanisms come into play.

Cross-Chain Bridges

Bridges connect different blockchains, enabling the transfer of assets and data between them. Think of them as digital highways. For example, if you want to move your tokens from Ethereum to Binance Smart Chain, a bridge handles the heavy lifting.

• You lock your tokens on the source chain (e.g., Ethereum).

• The bridge mints an equivalent amount of tokens on the destination chain (e.g., Binance Smart Chain).

• When you want to reverse the process, the tokens on the destination chain are burned, and the original tokens are unlocked.

Swaps and Liquidity Protocols

Swapping tokens across chains often requires decentralized exchanges (DEXs) or protocols like Uniswap and SushiSwap. Some advanced protocols like Thorchain take it a step further by supporting native cross-chain swaps without wrapping tokens.

• Liquidity pools on different chains allow you to trade one token for another.

• Cross-chain swap protocols use bridges under the hood to move assets while maintaining a smooth experience.

Interoperability Protocols

Protocols like Polkadot and Cosmos focus on making blockchains inherently interoperable. They create ecosystems where chains can share data and assets natively.

• Relay Chains: Central hubs that coordinate communication between connected blockchains.

• IBC (Inter-Blockchain Communication): A protocol standard used in Cosmos to let chains talk to each other securely. All contracts follow the Interchain Standards (ICS) for the Cosmos network & interchain ecosystem.

Universal Wallets

Tools like Particle Network enable universal account wallets that work across multiple chains. Instead of manually switching between networks, these wallets auto-detect and handle transactions on the right chain.

• Chain detection and configuration happen automatically.

• Transactions are routed to the correct blockchain without user intervention.

RPC Aggregators

Remote Procedure Call (RPC) endpoints are gateways to blockchains. Aggregators like Alchemy and Infura provide a unified interface to interact with multiple blockchains, abstracting away the need to set up individual endpoints.

Chain abstraction is the backbone of many user-friendly crypto applications. Lets see a few examples:

Imagine you’re using a decentralized finance app to swap Ethereum (ETH) for Binance Coin (BNB). Here’s what it looks like from your perspective:

1. You open the app and select ETH as the token to swap.

2. You choose BNB as the token to receive.

3. You click "Swap" and confirm the transaction.

From your perspective, it’s a one-click process. Behind the scenes, multiple tools work together to make it seamless.

1. The app detects that ETH is on Ethereum and BNB is on Binance Smart Chain.

2. A cross-chain bridge locks your ETH on Ethereum and creates a wrapped version on Binance Smart Chain.

3. The app uses a liquidity pool to exchange the wrapped ETH for BNB.

4. Finally, the app transfers BNB to your wallet on Binance Smart Chain.

Here’s a simple Solidity contract for locking tokens on Ethereum and emitting an event to notify a bridge:

// SPDX-License-Identifier: MIT
pragma solidity ^0.8.0;

contract TokenLock {
    event TokenLocked(address indexed user, uint256 amount, string destinationChain);

    mapping(address => uint256) public lockedBalances;

    function lockTokens(uint256 amount, string memory destinationChain) external {
        require(amount > 0, "Amount must be greater than 0");

        // Simulate token lock (e.g., ERC20 transfer to contract)
        lockedBalances[msg.sender] += amount;

        // Emit event for bridge to pick up
        emit TokenLocked(msg.sender, amount, destinationChain);
    }
}

This contract locks tokens on Ethereum and emits an event. A bridge service listens to the event and handles minting on the destination chain.

Lets take another example. Imagine you own an NFT on Ethereum but want to sell it on a Solana-based marketplace. Chain abstraction allows this by bridging the NFT to Solana while ensuring its metadata and ownership history remain intact.

1. The NFT is locked on Ethereum, and a wrapped version is created on Solana.

2. The marketplace interacts with the Solana version, displaying it as if it were native to Solana.

3. When the NFT is sold, the buyer can choose to keep it on Solana or transfer it back to Ethereum.
   

// SPDX-License-Identifier: MIT
pragma solidity ^0.8.0;

import "@openzeppelin/contracts/token/ERC721/IERC721.sol";

contract NFTBridge {
    event NFTLocked(address indexed user, uint256 tokenId, string destinationChain);

    IERC721 public nftContract;

    constructor(address _nftContract) {
        nftContract = IERC721(_nftContract);
    }

    function lockNFT(uint256 tokenId, string memory destinationChain) external {
        require(nftContract.ownerOf(tokenId) == msg.sender, "Not the owner");

        // Transfer the NFT to the bridge contract
        nftContract.transferFrom(msg.sender, address(this), tokenId);

        // Emit event for bridge service
        emit NFTLocked(msg.sender, tokenId, destinationChain);
    }
}

In this example, the contract locks an NFT and emits an event. The bridge then handles minting the wrapped NFT on the target chain.

How about EVM to Cosmos perhaps?

Here’s an example illustrating how a smart contract on Ethereum can interact with a Cosmos chain using IBC:

// SPDX-License-Identifier: MIT
pragma solidity ^0.8.0;

contract EVMToCosmosBridge {
    event TokenSentToCosmos(address indexed sender, uint256 amount, string cosmosAddress);

    mapping(address => uint256) public balances;

    function sendToCosmos(uint256 amount, string memory cosmosAddress) external {
        require(amount > 0, "Amount must be greater than 0");

        // Simulate token lock (e.g., ERC20 transfer to contract)
        balances[msg.sender] += amount;

        // Emit event for Cosmos chain to pick up
        emit TokenSentToCosmos(msg.sender, amount, cosmosAddress);
    }
}

This contract locks tokens on Ethereum and emits an event for an IBC-compatible relayer to transfer the equivalent tokens to a Cosmos chain.

On the Cosmos side, a module listens for IBC events and handles incoming tokens:

package tokenbridge

import (
    "github.com/cosmos/cosmos-sdk/types"
    "github.com/cosmos/ibc-go/modules/core/04-channel/types"
)

func HandleTokenTransfer(ctx sdk.Context, msg types.MsgRecvPacket) error {
    // Decode the packet
    var data TokenTransferPacketData
    if err := json.Unmarshal(msg.Packet.Data, &data); err != nil {
        return err
    }

    // Mint the tokens for the recipient
    recipient := sdk.AccAddress(data.Recipient)
    amount := sdk.NewCoin(data.Denom, sdk.NewInt(data.Amount))

    if err := MintTokens(ctx, recipient, amount); err != nil {
        return err
    }

    return nil
}

func MintTokens(ctx sdk.Context, recipient sdk.AccAddress, amount sdk.Coin) error {
    // Use the bank module to mint and send tokens
    bankKeeper := GetBankKeeper()
    return bankKeeper.MintCoins(ctx, ModuleName, sdk.NewCoins(amount))
}

This Cosmos module listens for incoming IBC packets, decodes the token transfer details, and mints tokens to the recipient's address. It complements the Ethereum-side contract to complete the abstraction.

Now, since blockchains are inherently siloed networks, they ideally wouldn’t know to even listen each other. That’s where the bridges and other tools come in. Even with bridges, potential limitations still exists. If the cross-chain bridge experiences congestion, your transaction might be delayed. Additionally, if there’s insufficient liquidity in the liquidity pool for the target token, you might get unfavorable rates or the swap could fail entirely. Lastly, any issues with the smart contracts underlying the bridge or pool could result in transaction errors or delays.
Despite these risks, robust protocols and fallback mechanisms are constantly evolving to mitigate such problems. Scalability can also become a bottleneck as the number of connected chains increases, requiring more resources to maintain performance. Security is another concern, as cross-chain communication introduces additional attack surfaces, such as vulnerabilities in the relay chains or the Inter-Blockchain Communication (IBC) protocol. Addressing these issues is critical for achieving robust and secure interoperability.

There’s a long way to go to achieve true chain abstraction, but we’re on the way already...